RBI's Policy Outlook Not As Hawkish As Expected, Say Experts

All but two of 60 economists in a Reuters poll predicted the repo rate would be kept on hold at its lowest level since November 2010.

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RBI's Policy Outlook Not As Hawkish As Expected, Say Experts

"The central bank's stance was largely along expected lines," said Radhika Rao, DBS.


The Reserve Bank of India (RBI) on Wednesday kept its key repo rate at 6 per cent for a third straight policy meeting, and also retained its "neutral" stance, seeking to support economic growth even as inflation has accelerated to a 17-month high.

All but two of 60 economists in a Reuters poll predicted the repo rate would be kept on hold at its lowest level since November 2010.

COMMENTS:

ANJALI VERMA, ECONOMIST, PHILLIPCAPITAL INDIA, MUMBAI

"The policy decision is in line with our expectation along with the hawkishness that is built into the statement. While we retain status quo from RBI for FY19, a risk to our call may come from higher inflation."

ADITI NAYAR, PRINCIPAL ECONOMIST, ICRA LIMITED, GURUGRAM

"As anticipated, the last planned review for FY2018 saw the Monetary Policy Committee (MPC) leaving the repo rate unchanged at 6 per cent. Moreover, it retained the neutral stance of monetary policy and reiterated its commitment toward achieving the medium term inflation target of 4 per cent."

"Despite the upward revision in the inflation forecast and concerns highlighted regarding growing inflation risks amid the crystallization of the fiscal slippage, the tone of the policy was not as hawkish as expected, given the comment that the nascent recovery needs to be carefully nurtured."

RADHIKA RAO, GROUP ECONOMIST, DBS, SINGAPORE

"The central bank's stance was largely along expected lines, reflected in a relatively muted response in the bond and equity markets. The stance is tilted slightly towards hawkish, with headline inflation seen above target in FY19."

"They remain optimistic on growth, expecting FY19 to head back toward 7 per cent. The guidance is likely to remain data-dependent, with a shift to tighten rates requiring further evidence in a built-up in inflationary pressures."


 
© Thomson Reuters 2018


(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)


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